New Delhi–India’s first quarter gross domestic product (GDP) growth at 7.1 per cent is mainly the result of more than 50 per cent increase in subsidy releases from the union budget, the government said on Wednesday.
“Q1 GDP at 7.1% mainly due to 53% increase in subsidy expr/front loading of subsidy releases from Budget,” Economic Affairs Secretary Shaktikanta Das said in a tweet.
India’s Q1 GDP slowed to 7.1 per cent for the first quarter of this fiscal, from 7.5 per cent in the like period of 2015-16, due mainly to lower activity in farm, mining and construction sectors, official data showed on Wednesday, even as industry said the numbers reflected a moderation of growth impulses.
“Three positives in Q1 GDP data: higher exports; higher manufacturing growth; higher growth in services,” Das said in another tweet.
The government has targeted the GDP growth to top 8 per cent this fiscal, mainly on the back of a normal monsoon season. The growth rate of the entire previous fiscal was at 7.6 per cent.
Worryingly, the gross fixed capital formation — a monetary measure of activities like building of roads, schools and hospitals, investments in plant and machinery, and construction of ports, and railways assets — fell to 29.6 per cent of GDP from 32.7 per cent in the previous year.
“Lower industrial growth & negative growth in gross fixed capital formation being analysed. Proactive policy responses of Govt will continue,” Das said in another tweet.
“Q1 export growth 3.2% against (-) 5.7% in Q1 last year.Manufacturing 9.1 % (7.3% last yr). Growth in services 9.6% (8.8%),” he said in a separate tweet
According to the Economic Affairs Secretary, going forward a good monsoon will help improve agricultural growth and rural purchasing power.
“Good monsoon, 7th pay commission payouts and impact of structural reforms are expected to boost growth in coming quarters of FY 17,” he said.
“FY 17 growth expected to be better than last year. Close to 8%. Policy initiatives of Government will continue,” he added.